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An 80 20 Mortgage – What Is Meant By This Term And Why Are They All That Are Available?
80 20 mortgages, and 75 25 mortgages are all that seem to be available these days. The reason for this is the policies of Fannie Mae and Freddie Mac have ruined the concept of creative financing. These agencies pushed way too many shady loans and because of this, they and the taxpayers and all future borrowers were burnt. So, we are left with the more traditional 80 20 mortgages. This is true even for people with great credit ratings. This article explains all about it.
A mortgage where 80% of the value of the property will be loaned to the buyer is known as an 80% 20% mortgage, or sometimes simply, an 80 20 mortgage. Throughout the years 2006 and 2007, the parameters of mortgages that were written were ridiculous. Some people were able to borrow more money than the property they were buying was worth. These people actually came out of their closings with their new homes and extra money in their pockets. Besides this, some people with extremely low credit ratings were able to buy homes without making any down payment!
The Wisdom of Bob Dylan
It has been said, people who rent don’t take as good care of their dwellings as people who own them. This makes sense because people who buy homes have a vested interest in making their property as valuable as possible. However, to quote Bob Dylan, “when you ain’t got nothin’, you got nothin’ to lose.” So obviously, when people were able to buy homes without using any of their money, these people became, essentially, renters. This is because they had nothing invested, so they had nothing to lose.
Irresponsible Lenders and Borrowers Have Hurt the Economy
When these people who had nothing to lose, were defaulting on their mortgages in great numbers, it became a problem for the economy. So the government, in its infinite wisdom, essentially gave more money to these people so they wouldn’t have to be foreclosed upon. This simply made matters worse because with this money there were no incentives attached for these people to try to make their properties more valuable and pay them off.
Putting Money Down Encourages Responsibility
Insisting borrowers pay 20% or 25% of the value of the properties they are buying erases Bob Dylan’s sentiments from the equation. These people who must take their hard-earned money to pay toward their homes now have incentive to take good care of them and to pay them off. Unlike people who bought homes with no money down, these people stand to lose $ 100,000 of their money if their houses become foreclosed properties. Therefore, it is logical they will do their best to avoid having their homes foreclosed. This is a good thing for the economy in general.
Some think it is cruel to revert to past policies which make it more difficult for first-time buyers to purchase their own homes. At first glance, it may look like these people have a point. However, how did people purchase their own properties throughout history and more pertinently, throughout the 40s, 50s, 60s, 70s, 80s, and most of the 90s? The answer is; people who want their own homes very badly will work hard and sacrifice to purchase them. These are the kind of responsible people who should own homes; not people who just plain don’t care.
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Fight to Delay Foreclosure Now, Then Use Some Tactics to Qualify For a Mortgage Modification Plan
Thousands of families are now involved in a big fight to delay foreclosure for as long as they could. The President Obama’s Mortgage Modification Program is now working at full speed, however, thousands of homeowners that once believed could be helped under this plan are now being left behind.
Due to the rigorous and complex requirements and pre-requisites that homeowners have to comply just to be considered for this program, these families are now just trying to fight to delay foreclosure in order to stay in their homes for as long as thy possibly could.
The red tape is long and wide and the bureaucracy and complexity of the basic requirements are so extraordinary that the whole program can be manipulated in order to serve the interest of those in control; in this case the Banks and Financial Institution. After the many bailouts that the banks have been given, now once more they are getting over 75 billion dollars as incentives to work with homeowners.
Their participation, however is voluntary, so they can just hand pick the mortgages that make sense for them financially, get their chunk of money as incentive, and leave out of the ball most of the homeowners.
There are, however, some amendments in progress to make the Obama’s Mortgage Modification Program easier to implement, easy to understand and ease in some ways the rigorous requirements for a homeowner to be considered for help. Nevertheless, in the meantime, thousands of homeowners that have been rejected for the program are now losing their home to foreclosure.
Don’t let that happen to your family; even if you were rejected to be considered under Obama’s Mortgage Modification Program for many different reasons you may later on qualify for this help if you can fight to delay foreclosure now, and stay in your home for some time. Even if one of these reasons is that you did not have enough income or not income whatsoever.
The idea is to fight to delay foreclosure now, to later use some tactics and strategies to qualify for the program. This is possible if you know what to do now to put a good fight delay foreclosure, and then you know how to proceed accordingly to be considered for the participation on the program. You can use the law in your favor to delay the foreclosure process and you can do it on your own once you know how the system works.
Your fight to delay foreclosure should now be more cautious that ever, because now with the Obama’s Mortgage Modification Program in the open, lenders are accelerating the foreclosure process in those who do not qualify for the program. So you have to make arrangement with your bank in order to delay the foreclosure of your home, but you have to be armed with knowledge in this fight.
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